Last updated: September 9, 2022
According to an Insider Intelligence report in 2020, the subscription ecommerce market grew by about 41%, valuing the whole sector at $23 billion.
That number has only increased in the years since, and for good reason. Product subscriptions can be an effective way to secure recurring revenue, encourage repeat purchases, and foster customer loyalty.
That said, managing subscriptions can be tricky, especially for online stores that are dealing with product subscriptions for the first time.
As a subscription management platform for Shopify stores, at Upscribe, we know the ins and outs of subscription management. In this article, we’ll explain what it is and provide actionable insights using real examples that can help you manage and scale your ecommerce subscription business.
What is Subscription Management
Subscription management happens once you’ve onboarded your customers and can count them among your subscribers. Your responsibility is to maintain a high-quality customer experience, so that your subscribers stay loyal to you.
This means that you need to accommodate any subscriber behaviors by managing:
- Upgrades and downgrades to their plans for subscriptions payments
- Billing and invoices
- Communication via email and SMS
These might sound like simple tasks, but it’s easy to ruin the user experience and checkout flow by failing to consider what your subscribers need every step of the way. Without apps like Upscribe, the infrastructure that Shopify provides lack the right tools to correctly manage your product subscriptions.
5 Advantages of Adopting a Subscription Model
Recurring Revenue from Loyal Customers
It’s far easier to engage with people who have already bought from you, because they actively want more of your products.
By focusing on the customers that love your products and brand, you can avoid some of the common headaches that come with marketing and dealing with new customers who don’t know what they’re up for.
Increase Customer Lifetime Value
Customer lifetime value (LTV) tells you how much money each customer brings into your business. If you can get customers to pay you consistently with a recurring transaction, then their LTV goes up.
Reduce Customer Acquisition Cost
It’s much more expensive to acquire a new customer than retain existing ones. You can focus on getting more revenue from loyal customers and increasing your average customer lifetime value than endlessly spending on those that might not even purchase your products.
Subscriptions help you sell your less popular products. For instance, if you have a product that isn’t selling well, you can add it to a subscription at a discount to get rid of the inventory.
Bundling is great for customers too. They get more flexibility in trying out new products and combinations.
With a stable base of subscribers, it will become easier to forecast the amount of items you need to meet demand. You won’t be as vulnerable to massive swings in interest from buyers who will only buy your products once. This will give you more confidence in your operations. Your suppliers will also appreciate the stability of the volumes of items you want processed.
How to Manage Subscriptions Properly
When done properly, subscription management can help keep your costs low and growth high. Subscription businesses need to focus on retaining their customers by offering an excellent customer experience.
This process revolves primarily around improving customer retention and repeat business. Some of this can be reactive, such as offering discounts to churning customers. But using a platform like Upscribe can help you devise ways to actively grow your subscription base.
In particular, you need to pay attention to subscription data to learn which customers are slipping away and which products help foster brand loyalty.
Create a Flawless Customer Experience
If you’re seeing a lot of subscription churn, you might not be providing the best possible customer experience. Using a subscription management platform like Upscribe helps you optimize every aspect of the subscription process by:
- Helping you create simple product subscriptions
- Providing ways to cater to your customer needs and establish expectations
- Duly responding to support queries related to product subscriptions and
- Providing powerful subscription analytics to find ways to grow your subscription base
For instance, Upscribe features a customer portal that integrates with your Shopify checkout. We give you tools to let your customers manage their subscriptions via SMS or email, thereby reducing admin work on your side.
Employ Churn Deflection
Churn is the number one enemy of any subscription-based business. You need to take specific actions to prevent your subscribers from churning, especially if it’s involuntary and preventable.
Upscribe provides dynamic ways to reduce subscription churn, such as smart discounts, purchase reminders, and gifting schemes. This is a good way to boost customer loyalty and make sure your customers last longer, especially during a recession.
Analyze Subscription Analytics
The subscription manager’s key tool is customer data. Using Upscribe, you can build cohorts of customers based on characteristics like total purchases, location, and much more. Looking through their history, you’ll be able to figure out which products and tactics help grow your product subscriptions.
Avoid Failed Credit Card Payments
Sometimes, customers churn because their credit card expired. It’s not your fault, but you can take measures to prepare for this scenario.
Our dunning engine helps you identify the best time to recover a declined credit card charge. And you can do this without having to send emails or SMS reminders to tardy payers, again automating a task that is repetitive, yet valuable. Our system also allows you to notify customers of their upcoming credit card expiry so that you can avoid this issue altogether.
Applying Subscription Management Strategies in Your Ecommerce Business: Two Case Studies
All these ideas sound pretty good, but it’s best to understand them by showing you a couple of real-life examples. The following ecommerce companies applied subscription management principles in a bid to resolve their pain points and grow their businesses.
Optimizing The Whole Subscription Process With Ready, Set, Food!
Ready, Set, Food! is a nutrition company that helps babies with food allergies increase their tolerance to products such as nuts, eggs, and milk. The subscription model fit their business perfectly since each baby required monthly doses of the food they were allergic to, so that they could build up their tolerance levels.
Abandoned carts plague thousands of ecommerce companies, and it’s the main reason why Ready, Set, Food! went to us. Their product subscription process was broken, leading to high churn rates that could have been prevented using effective subscription management strategies we’ve highlighted above. With Upscribe, the company:
- Reduced cart abandonments by 10% by offering customers a discount and targeted messaging.
- Monitored their customer journeys dynamically and prompted them to take the appropriate measures.
- Used data to figure out the best products for bundling and the billing cycles they needed to use to optimize their growth.
All in all, the business reduced its shipping costs and increased its margins by 25-35%.
Centralizing Product Subscription Management With Beekeeper’s Naturals
Beekeeper’s Naturals was trying to grow its subscription base, but the business didn’t have an effective way of managing subscribers. They had to use different apps to create, upsell and improve subscription flows. Even then, the apps didn’t integrate properly, so they had to put these strategies on the shelf.
When Beekeeper’s Naturals came to us with their problems we quickly identified the real issues with their subscription model. We got rid of the unnecessary apps that had burdened their cancellation flows, and allowed customers to upgrade and cancel their subscriptions with ease. They also leveraged our churn deflection tools in their cancellation flows to retain more customers.
Beekeeper’s Naturals also employed our custom Klaviyo integrations and rich customer data to email long-term subscribers and upsell them. They increased customer lifetime value through gestures of loyalty like offering swag and setting aside inventory upon request.
Give Your Subscriptions a Boost With Upscribe
So far, we’ve processed over $500 million in Shopify revenue at Upscribe. When it comes to subscription management, you can trust us to help you deliver the ideal experience for your customers. Our users appreciate that we don’t try to box you in with limited tools. They benefit from the flexibility that our powerful customer portal affords them.
Schedule a free demo today to see how you can eliminate subscriber frustration and boost your revenue.